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EBRD buys 15% of largest Kazakh bank
$30.6 million deal is EBRD’s first pure equity stake in a Kazakh bank
The European Bank for Reconstruction and Development is paying $30.6 million for a 15 per cent stake in Kazkommertsbank, the largest Kazakh bank, as part of a strategy aimed at strengthening its capital base, broadening its international ownership and extending its ability to finance various sectors of the Kazakh economy.
By inviting the EBRD to participate in its capital, Kazkommertsbank is signalling its determination to increase its transparency and set new standards in corporate governance, EBRD President Jean Lemierre said at a signing ceremony in Almaty.
Moreover, the deal should enable the bank to invest more in small and medium-sized enterprises (SMEs) and create jobs beyond the country’s dominant oil and gas industries. Mr Lemierre said the EBRD plans to use its seat on the bank’s supervisory board to help its biggest and oldest partner in Kazakhstan achieve its goals and further raise its international profile. The fact that this is the EBRD’s first pure equity deal in a Kazakh bank gives it added significance.
At present, 32 per cent of Kazkommertsbank’s ordinary stock is in the form of Global Depository Receipts (GDRs) that are traded only in Europe. An additional international listing is among the options under consideration as part of Kazkommertsbank’s efforts to increase the stock’s liquidity. Following this transaction the EBRD holds 15 per cent of voting shares and 12.9 per cent of total capital.
Kazkommertsbank is the EBRD’s biggest client in the Kazakh financial sector, which is considered to be the most advanced in the Commonwealth of Independent States (CIS). The bank, which is controlled by its management, has a strong reputation locally for credit and risk management.
In 1998, the EBRD advanced a $40 million senior loan to Kazkommertsbank, followed by a $50 million syndicated loan last year. The EBRD placed $20 million of this syndicated loan among a group of international commercial banks. The 1998 senior loan was fully repaid in 2002.
The EBRD has also committed up to $35 million to Kazkommertsbank to guarantee its letters of credit under the Trade Facilitation Programme set up by the Bank to promote the flow of East-West trade. Other key EBRD initiatives in which the Kazakh bank has participated include the Kazakhstan Small Business Programme, under which the Bank has committed up to $30 million.
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